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As South African businesses enter a new year that is fraught with economic uncertainty, achieving sustained growth will be a difficult task. Yet for leaders who can turn an enterprising eye to the many opportunities within emerging technology, there is immense potential for growth and innovation.
One such example is the increasing influence and prominence of APIs, which are already changing the face of banking, for one.
API stands for application programming interface, and essentially describes an efficient mechanism to allow software to ‘talk to’ other software.
Let’s take a closer look…
Commercial sites, such as Facebook, make certain parts of their code available to developers so that they can build tools for the site. The code that they expose is called the API — and the things they build (the tools and widgets) are the applications.
Because skilled developers can use APIs in different ways to build different things, it naturally lends itself to innovation. In turn, this innovation can be translated into various new income streams for stakeholders — thus spurring economic growth on a macro level.
For savvy business leaders, however, the role of APIs can extend far beyond the addition of some robust new income streams.
There are added benefits, which are becoming increasingly relevant in today’s fast-paced, highly competitive global business ecosystem. For South African businesses that are prepared to be early movers, APIs represent a critical window of opportunity in an environment besieged by negative sentiment.
As cyber security analysts now warn, almost every business today — no matter its size or sector — is vulnerable to cyber attacks. Indeed, many believe that it is no longer a case of if your business is targeted, but when.
From phishing schemes to fraudulent SIM swaps to ransomware, cyber fraud is a daily reality that leaders must contend with. Arguably, the increased use of APIs offers up an important barrier to cyber criminals, particularly for businesses within high-risk environments such as banking and insurance.
For one, in order to grant access to the site in question, an API will generate a unique code or key. Each user receives a new key that only allows access to certain data and information — so that there is no exchange or hand over of data involved. This makes APIs extremely difficult to hack — a critical benefit in an environment that is currently rife with highly sophisticated cyber fraud.
Reduced costs, heightened efficiency
As it stands, many South African businesses see a large portion of their profits eroded by expensive administration processes and the associated expense of human resources. Once the initial development costs have been covered, APIs are a seamless product offering that eliminate various administrative processes and reduce the human input/labour required for certain functions.
For example, banks can open up a lending API to e-commerce sites that allow the end user to apply directly for a personal loan for their basket — without having to contact the bank! Essentially, by harnessing an API, the loan process becomes entirely automated (and incredibly efficient).
Importantly, APIs create an always-on presence for businesses, meaning that companies can run and generate income around the clock — with little to no manual input or oversight.
Boosting SMME growth
Perhaps one of the most exciting aspects of harnessing APIs right now, particularly in South Africa, is the fact that it is new territory with vast potential for quick growth. Indeed, the value of an API is currently understated and mostly unknown, especially given that there isn’t any existing benchmark or real means of capturing an APIs financial significance.
However, that is beginning to change, with the banking sector facing increasing pressure to open up their APIs and facilitate an open market place for developers.
This will undoubtedly stimulate and support wider economic growth, because businesses will inevitably make their digital assets easier for internal developers to use and enhance — while simultaneously packaging and opening up those same digital assets for external partners and developers.
Put simply, as more external partners and developers leverage an organisation/provider’s APIs, those APIs become more likely to be harnessed for innovative new use cases that sit beyond the provider’s core capabilities and services.
Ultimately, this creates a virtuous cycle whereby API adoption ignites ecosystems of suppliers, SMMEs and users around the provider’s business — and enables it to break into new or adjacent markets.
So, not only does the core API provider benefit from growth without any expensive capital outlay or acquisition costs, but new SMMEs and suppliers also arise around it.
Looking ahead, while there are still many questions to be answered around pricing structures and other technicalities, it is clear that APIs are becoming a critical engine for growth that businesses simply cannot afford to overlook.
Feature image: José Alejandro Cuffia via Unsplash